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Tag: OfTwoMinds.com

From Charles Hugh Smith at the OfTwoMinds.com blog, here's a report from Ray W., an energy consultant. It offers some hope that the United States can overcome its oil addiction, with smart planning and effective leadership. Can we do it? Time will tell.

I try to understand the key dynamics of the energy marketplace because I believe that we have reached peak oil and the modern countries are so dependent on fossils fuels. The report below seems to be very objective.

I worry that the Saudis and big oil companies have so much influence in our government that our energy policy will remain the same, until we run out of money.

Of the three main fossil fuels, natural gas is uniquely situated.

Oil is nearing peak production. To find new reserves, companies such as BP, Shell, and ExxonMobil venture into ever more hostile environments, both physical and political, spend ever higher amounts of money, and take ever greater risks. Deepwater Horizon, the oil platform that detonated and sank in the Gulf of Mexico and spewed four million barrels of crude into one of the world’s most productive fisheries, is a tame example.

For real expense and environmental risk, look at the tar sands in Canada; for political risk, look at the Niger Delta. The increasing cost of oil exploration and production will consume a larger share of GDP, just as health care does, and if we continue to expand our dependency on oil, we will continue to erode the standard of living for all but the very wealthy. The trajectory of the price of oil is structurally upward.

Coal is simply nasty. It’s advantage: it’s plentiful and therefore cheap. Otherwise, it’s a supremely destructive substance at all stages of its exploitation, from mining to transport to combustion to ash disposal.

Natural gas is far more plentiful than oil and far less environmentally destructive than coal.

Gas produces about 40% of the carbon dioxide of coal for the same kilowatt-hour of power generation. It leaves no solid waste at all, unlike coal, which leaves tremendous piles of ash that must be disposed of and that are susceptible to environmental catastrophe. The Kingston spill in 2008 deposited 5.4 million cubic yards (about four times the debris of the World Trade Centers) in the Emory and Clinch Rivers in Tennessee.

Gas contains no mercury, lead, arsenic, or other heavy metals as does coal. At pipeline quality, its combustion produces no sulfur dioxide (the main cause of acid rain) and far less nitrous oxide (the main cause of smog) than coal.

Gas is transported by pipeline, which is extremely efficient. Pipelines, being underground, are also visually and logistically unobtrusive and, despite the recent tragedy in San Bruno, California, generally safe. Far more people have been killed in coal-related accidents, not to mention aviation or automobile accidents, than have been in gas-related accidents.

Now we come to extraction, where things get more complicated.

In the past three years, the amount of natural gas produced in this country has increased 16%, from 18 to 21 trillion cubic feet. This is attributable to recent rapid advances in two drilling techniques: horizontal drilling and hydraulic fracturing. The high price of gas earlier in the decade spurred the development of these technologies, which extract gas from solid rock, rather than from conventional pooled deposits.

Extraction presents some serious environmental issues. Some gas deposits contain a fair amount of sulfur, which must be removed and disposed of. Most extracted sulfur is made into sulfuric acid for industrial purposes. Other deposits contain carbon dioxide in quantities as much as 12 percent by volume, which reduces the resource’s greenhouse gas advantage. And it takes a great deal of energy to drill for gas. The rigs generally run on diesel. The recently developed techniques for extracting gas from shale formations also consume large amounts of water. That said, gas extraction doesn’t use nearly the amount of energy or water as coal mine excavation.

Water will be the limiting factor for expanding gas production in the United States. Some shale gas producers have been working diligently to find environmentally acceptable ways to minimize the use of water, mostly through reuse. In shale gas production, the water is injected under pressure to fracture the rock, which liberates the gas.

The injected water contains several chemicals to provide for the optimal viscosity to enhance fracturing while still being liquid enough to withdraw easily. Most producers use less than a dozen chemicals, which comprise 0.5 percent of the injection stream. The very high numbers of chemicals (approaching 600) quoted in the film "Gasland" are an amalgamation of all the chemicals ever used for fracturing across the industry.

Some producers are racing to gain first-mover advantage in the shale plays, which seem to pop up every three months. These producers tend to be less cautious than others, and this is how accidents happen. But there is nothing intrinsically more hazardous or risky about drilling for gas in shale formations than drilling for conventional gas, or drilling for oil, or mining for coal.

Gas-bearing shale tends to be several thousand feet (one to two miles) below the aquifer. There is virtually no way for the gas to migrate into the aquifer except through the vertical component of the well that penetrates the water table en route to the gas resource. Gas wells, like oil wells, are encased in cement to protect the surrounding ground from seepage. Sloppy procedures can result in bad cement jobs. But this risk is present for any gas or oil well; it is not particular to shale gas.

The United States can substantially reduce oil usage and coal usage and improve carbon dioxide emissions by increasing the production and consumption of natural gas. We can reduce carbon dioxide emissions by 20% within weeks, simply by switching about 15% of coal-fired electric generation to gas-fired, using existing spare capacity in the gas-fired fleet.

There is plenty of gas to make this happen without risking huge price run-ups. Gas prices on average might move up about $1.00 per MMBtu, from the $4.00-$5.00 range to the $5.00-$6.00 range. While this would be a 20-25% increase, other costs would go down, specifically the costs of coal-caused pollution. This does not consider the future value preserved by slowing climate change. Also, increased demand would spur increased production, which would moderate such price increases.

Eventually, gas use will have to be reduced if we are to avoid the worst of climate change. Increased gas use is a transitional strategy for the next 20-30 years, to provide time for renewable energy and efficiency technologies to be developed and deployed. However, even at that point, gas would still have a role. It is the logical fuel to use to complement the intermittent nature of renewable electric generation.

Technological improvements are likely in electric storage, but electric storage is unlikely to be economical enough to span all 24 hours of the day. Gas, delivered through pipelines, is an on-demand electric generation fuel, unlike coal or oil, and can respond instantaneously as minute-to-minute consumer demand and renewable generation fluctuate.

If we craft public policy to favor gas to displace coal and oil, we have to be careful not to grow complacent. Gas is not a panacea for climate change. It is still a fossil fuel. However, it is a readily available, pragmatic, interim solution as we move to renewables and efficiency over the next 20-30 years.

I am very grateful to my wife Ann, whose green thumb provides us with home-grown food which become tasty and healthy homecooked meals. Her blog at Inspired Gardening documents her garden and food preparation.

…"a garden and a homecooked meal are revolutionary acts." These simple acts are revolutionary because they upend the oppressive regime of agribusiness, packaged/fast food and the sick-care system–all parts in a seamless system of ill-health, derangement, torpor and chronic disease which can be treated with enormously expensive and mostly needless medications and procedures.

This is what I term an integrated understanding of the entire system of growing and consuming food and health.Agribusiness, fast food, high salt, high fat and high sugar processed "foods" (poisons is a more accurate term), chronic illness and various derangements, and an immensely profitable sick-care system are all one. There can be no "solutions" without an integrated understanding that simple behaviors are the heart of any and all real solutions. Buying something "new" is a simulacrum "solution" marketed to reap profits.

The solution to sick-care starts not with 1,000 pages of legislation, paid for with trillons of dollars of borrowed money but with an understanding of the causal connections between gardening, vegetables/food, cooking rather than consuming, self-reliance, goal-directed activity and responsibility for one's health.

So here is a short, semi-random list of solutions which don't depend on Federal borrowing and largesse:

1. Every small business owner who vacates a tiny $3,000/month storefront and hastens the bankruptcy of the commercial landlord who "needs $3K" from the space to pay an inflated mortgage is part of the solution. When the building is sold later for a modest sum, spaces can be rented for what a struggling business might actually afford, i.e. $300/month.

Please note:

Nobody needs to start or operate a small business. You cannot coerce anyone to take the risks of entrepreneurship, hire workers, rent space and pay taxes. Every entrepreneur can opt out at any time when the risk-return ratio turns negative. High rents, high taxes and lower revenues have turned the ratio extremely negative.

2. Every parent/guardian who teaches a child (by their own example) to unplug electronics which are not in use and all those energy-hogging inverters/rechargers is part of the solution.

Q.: What percentage of household electricity in the U.S. is lost to appliances that are turned off?

According to The U.S. Department of Energy, there are 2,776 electrical generation plants in the U.S. That means 140 power plants do nothing but generate the electricity wasted by DVD players, TVs, answering machines, stereo systems, xBoxes and computers plugged into wall sockets while not in use. One easy solution: put as many of these devices as is practical on power strips which can be turned off with one switch.

Although I'm a bit rushed right now and can't look up the statistic, I think 140 power plants burn over a million tons of coal a year. That's a lot of coal to keep your TV and computer speakers on standby.

3. Everyone who focuses not on losing weight but on becoming fit and feeling better via refusing to consume junk food and garbage fast food is part of the solution. Changing the goal from weight loss to well-being is a solution for the individual and for our society as a whole.

4. Everyone who consciously chooses to prepare a home-cooked meal rather than buy a toxic-waste fast food meal is part of the solution–and a revolutionary to boot: "A healthy homecooked family meal and a home garden are revolutionary acts."

Please don't email me that "real food" is unaffordable; beans and rice and vegetables from the Asian or Hispanic or Halal markets are much cheaper than fast food. Please click on the "What's for Dinner?" tab at the top of the page for an analysis which proves this. When it comes to fast food, what we have can be boiled down to one word: excuses.

5. Everyone who forms or helps sustain a community garden is part of the solution: "Food is wealth, health is wealth, energy is wealth; all else is illusion." (For more aphorisms, please scroll down this page.)

6. Everyone who starts bicycling, insulates their water heater, or installs solar panels, etc. is part of the solution. The cheapest energy "source" is conservation. Installing solar panels isn't just a metric of which energy source costs "less"–as measured by what? What if the energy is priced in gold, or oil, or air quality?

There are dozens of other solutions which we control and which don't require unsustainable Federal borrowing and largesse.

Real, useful capitalism requires not a response to the belated price signal but visionary action. And since it is already too late to alter large, long-term issues at the Governmental level—say, mass transit, zero-energy homes, or building the transmission and generation capacity to support wind-fueled electric cars—the best any of us can do is to think ahead to make sure that we ourselves are insulated from unnecessary trouble. That is to say, if you want pickled herring on Friday, would you save in strawberry jam and hope to trade? So if you want a retirement that includes food, energy, and security, wouldn't it make more sense to invest directly in those things? The working of the price signal depends on somebody else thinking ahead and saving for you, anticipating what you may need and making it. But we already know those needs will not be met in the macro sense. So if you want them and want them reliably, shouldn't you buy them now while they're cheap? Things such as a low-energy/low money input house. Things such as ways to provide and produce your own food: a greenhouse, a mushroom log, a garden, a chicken coop. Perhaps become a marginal producer of energy with investment in wind, PV, or whatever other creative solution takes your fancy. As you will have far less to buy later, higher prices and shortages will have less effect on you while the yearly savings of non-buying accrue year after year. You thereby use your retirement savings far more wisely, with far more certainty and control.